Firm that won NH state liquor contract sanctioned by feds, ordered to pay safety fines, back wages

Exel Inc., the Ohio-based company that won a $200 million, 20-year warehouse contract with the New Hampshire Liquor Commission, was recently sanctioned by the federal government for occupational safety and minimum-wage law violations at a warehouse it operates in Pennsylvania.

The Department of Labor announced Nov. 14 that it had recovered more than $213,000 in back wages for 1,028 foreign students employed at a candy packaging warehouse operated by Exel in Palmyra, Pa., and obtained an additional $143,000 in fines for safety and health violations at the facility.

The settlement includes commitments by Exel to comply with labor law and safety regulations at each of its 300-plus company sites nationwide.

The Hershey Co. owns the large distribution center in Palmyra, but hired Exel to run it. Hershey was not cited by OSHA.

Exel spokeswoman Lynn Anderson described the sanctions as "a situation that was really unique to that one site."

The federal action came after a six-month investigation prompted by the protests of foreign student workers on an international exchange program hired by a temp agency to work for Exel.

A 24-page citation by the Occupational Safety and Health Administration issued last February found that Exel had failed to report 42 serious injuries over four years at the site, which amounted to 43 percent of injuries in the four-year period. According to a New York Times report on Feb. 21, 2012, the injuries required medical treatment, and many were related to lifting and moving big boxes of Hershey's chocolates along a packing line.

"The fines, which are high for workplace safety offenses, were levied because six of the violations were for willful failure by Exel to protect its workers," the Times reported. "Labor officials said they had found an email in which Exel managers explicitly decided not to provide audio protection for workers in the noisy plant, even though they were aware of the problem."

Most of the OSHA violations were for failing to report injuries.

"It was very clear to us that dozens of injuries had not been recorded," OSHA officials told the Times. "Exel understood exactly what the law was on reporting. They were aware of these other injuries, and they just did not record them."

Exel initially said it would contest the citations and fines before an independent commission that reviews OSHA decisions, but in November agreed to the settlement, according to Anderson.

"It was a rather complex situation, but it did ultimately result in a settlement with the Department of Labor that was shared by Exel, the temporary labor provider we used at the site and the firm that hosted the students in the United States," she said.

Wage law violations

The minimum-wage violations stemmed from the fact that excessive housing costs were charged to the foreign students and deducted from their pay, reducing their hourly wage below the minimum required by the Fair Labor Standards Act, according to the OSHA statement on Nov. 14.

"We agreed to the collective settlement really for the purposes of resolving things economically and amicably with the Department of Labor," Anderson said. "On the issue of wages, we contend and there is verbiage in the settlement that acknowledges Exel did not have any visibility to the payments going through the temporary agency. But because those were workers who were employed at our site, we took responsibility."

She said the OSHA violations were related to record-keeping and noise abatement, and that Exel has met all the terms of the settlement regarding safety and injury reports moving forward.

The Nov. 14 settlement requires Exel to review its compliance with minimum wage, overtime and record-keeping at each of its sites, and to maintain a hotline for workers who may believe their rights have been violated. It also requires the company to end an incentive program based on the number of reported or recorded injuries and illness at a facility.

"This action is consistent with OSHA's current efforts to eliminate bonus plans that potentially incentivize non-reporting of injuries," said an OSHA spokesperson.

Bow warehouse site

Anderson said Exel is moving forward with plans to start business in New Hampshire on behalf of the state Liquor Commission, and has identified a site along 3A in Bow for construction of a 240,000-square-foot warehouse, working with ProCon construction of Hookset and T. F. Moran engineering of Bedford. She said the company expects to hire 50 workers once the site is up and running.

Two unsuccessful bidders have challenged the liquor commission's request for proposals and the bidding process that led to the Exel contract. Second-place bidder XTL-NH Inc., has filed an appeal with the commission, while third-place bidder Law Warehouses of Nashua, which has done the work for decades, is considering an appeal to Superior Court.

When asked if the Liquor Commission Evaluation Committee was aware of the penalties and fines against Exel in Pennsylvania when it recommended the Exel contract, commission counsel Stephen Judge declined comment.